Where do I find Self-storage partners?

You have been looking for properties for a while and you found it. You spoke to the lender, and you need more of a down payment than you currently have or maybe you can’t qualify on your own, so you need a partner. It just takes one partner to jump you up to the next level of investing in self-storage, who are you going to ask to be your partner?

Before you start asking friends or family members or other successful self-storage investors to work with you, you need to decide how you want to structure your partnerships. The first thing that you need to decide is what role are you going to take. Are you going to manage the property or is your job just to find the properties and oversee their transformation and then move on to the next property? If you are managing the properties, are you getting paid separately for that? It is a huge time commitment that may prevent you from building your self-storage empire. You should be compensated for running the business. There is a lot of value in knowing how to take a property and evolve it into its potential. This is how you buy low and sell high. You have to know how to make the property more profitable.

Next, is your partner going to be an active partner in the project or are they just going to be paid a percentage of the profits? If they don’t have any experience in self-storage you may want to push them towards just getting a percentage of the profit. You don’t want someone who is completely uneducated dictating how you should run your business. Sometimes partners want to make decisions without understanding all the ramifications of those decisions.

If they do have experience, how much control are you going to let them have. It is unwise to have a 50/50 partnership because things can come to a draw. You want someone to have a bigger vote to break ties. You should always try to keep the largest percentage of the property so that you have the controlling vote. If you have multiple partners, make sure that ownership is spread out in a way that there is no possibility of a 50/50 vote because it will stall out your project.

A simpler way to bring in partners is to offer them a percentage of the profit. You also need to make sure that your potential investors know that this is going to be a 3-5 year investment. If you are going to be inviting multiple partners to work with you, then you may need to offer a different percentage to each partner because they will all be bringing something different to the table. Will you offer a better return to people who are investing more money?

Many investors feel like they need to do a 50/50 split with someone because they helped with the financing. This may be true on your first few deals. However, as time goes on, you won’t be able to do this because you will be working on larger transactions with multiple partners. You may never do a 50/50 split, but you need to know that up front.

You should make a list of everything that you do. This will help you see your value and it will definitely help your future partners see your value. You are bringing the property and the lender to the table. You will be overseeing the improvement and management team on the property.

It is okay to offer someone a portion of the profit and a percentage of the increase in value when the property is sold in 5-10 years. Your goal may be 3-5 years, but you might want to keep the property longer or you may decide that you don’t want to sell at all, you simply want to cash them out. They may realize what a great investment this is and decide they want to stay on long term.

Offer flexible plans. Does one investor want to just keep their money rolled into the project? Does another investor want to get paid out quarterly or annually? Make sure that they know your exit strategy. Is this a long term investment where you will be keeping the property, or do you plan to fix the property up and cash out in 3-5 years?

Most importantly, as you start finding good partners, remember that they know people with money. Always ask your partners if they know someone who might be interested in partnering with you. If they know that your system works, and they are making money, then they will sell your next project for you. You can always offer a financial incentive for bringing you new financial partners.

Don’t be afraid to find partners. Ask people if they are interested in self-storage. Let them know what a great asset self-storage is. Show them how strong the statistics are. This is a great business to be in. As always, happy investing.